Interviews
News Flash
Select Comfort sees improvements against turn-around plan
25 Jul '09
5 min read
Preserving Cash and Improving Capital Structure
• Maintained strict discipline on capital spending in the quarter. Capital expenditures in the second quarter of 2009 were $0.7 million compared with $10.6 million in the prior-year period; and
• Reached an agreement with Sterling Partners for a $35.0 million investment, subject to shareholder approval and other closing conditions, which also would result in an amended credit agreement with new covenants and extended maturity from 2010 to 2012.
“We are pleased with the impact of our efforts on our overall financial position, and our team remains focused on pursuing incremental ways to reduce costs, build our brand, and preserve cash and improve our capital structure,” continued McLaughlin. “These efforts will help ensure we have adequate capital and are well positioned for future success as our programs gain momentum and the macro-economic environment ultimately improves.”
Second-Quarter Summary
During the second quarter, total sales declined 21 percent compared to the prior-year period. Retail sales, which accounted for 78.9 percent of total sales, declined 16 percent compared to the prior-year period.
Second-quarter gross profit margin was 61.6 percent, up 201 basis points from 59.6 percent in the prior-year period and 304 basis points on a sequential basis from 58.6 percent in the first quarter. The year-over-year improvement reflects improved efficiencies in manufacturing, offset by a more aggressive promotion strategy to generate store traffic and drive sales.
Sales and marketing costs in the second quarter of 2009 decreased by 28 percent to $61.1 million or 50.6 percent of net sales. This compares to $85.4 million, or 56.2 percent of net sales in the prior-year period. General and administrative expenses were $11.7 million in the second quarter, or 9.7 percent of net sales. This compares to $14.1 million, or 9.3 percent of net sales, in the second quarter of 2008.
Cash flows from operating activities totaled $35.6 million for the first six months of 2009, which included $25.8 million in tax refunds associated with prior-year losses. This compares to $10.4 million of operating cash flow for the first six months of 2008. The company reduced capital expenditures to $1.9 million for the first six months of 2009, compared to $20.9 million in the first six months of 2008, which reflects actions taken to significantly reduce investments in store expansion and IT infrastructure. As of July 4, 2009, cash and cash equivalents totaled $4.5 million, and outstanding borrowings under the company's revolving credit facility totaled $43.8 million.
• Maintained strict discipline on capital spending in the quarter. Capital expenditures in the second quarter of 2009 were $0.7 million compared with $10.6 million in the prior-year period; and
• Reached an agreement with Sterling Partners for a $35.0 million investment, subject to shareholder approval and other closing conditions, which also would result in an amended credit agreement with new covenants and extended maturity from 2010 to 2012.
“We are pleased with the impact of our efforts on our overall financial position, and our team remains focused on pursuing incremental ways to reduce costs, build our brand, and preserve cash and improve our capital structure,” continued McLaughlin. “These efforts will help ensure we have adequate capital and are well positioned for future success as our programs gain momentum and the macro-economic environment ultimately improves.”
Second-Quarter Summary
During the second quarter, total sales declined 21 percent compared to the prior-year period. Retail sales, which accounted for 78.9 percent of total sales, declined 16 percent compared to the prior-year period.
Second-quarter gross profit margin was 61.6 percent, up 201 basis points from 59.6 percent in the prior-year period and 304 basis points on a sequential basis from 58.6 percent in the first quarter. The year-over-year improvement reflects improved efficiencies in manufacturing, offset by a more aggressive promotion strategy to generate store traffic and drive sales.
Sales and marketing costs in the second quarter of 2009 decreased by 28 percent to $61.1 million or 50.6 percent of net sales. This compares to $85.4 million, or 56.2 percent of net sales in the prior-year period. General and administrative expenses were $11.7 million in the second quarter, or 9.7 percent of net sales. This compares to $14.1 million, or 9.3 percent of net sales, in the second quarter of 2008.
Cash flows from operating activities totaled $35.6 million for the first six months of 2009, which included $25.8 million in tax refunds associated with prior-year losses. This compares to $10.4 million of operating cash flow for the first six months of 2008. The company reduced capital expenditures to $1.9 million for the first six months of 2009, compared to $20.9 million in the first six months of 2008, which reflects actions taken to significantly reduce investments in store expansion and IT infrastructure. As of July 4, 2009, cash and cash equivalents totaled $4.5 million, and outstanding borrowings under the company's revolving credit facility totaled $43.8 million.
Select Comfort Corporation
Popular News
Leave your Comments
Esteemed Clients
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Telangana State Industrial Infrastructure Corporation Limited (TSllC Ltd)")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Taiwan Textile Federation (TTF)")
